Lord Levene of Portsoken, the chairman of Lloyd’s of London, made a fresh assault on the Government’s tax policies last night, arguing that dominance of the world’s largest insurance market was coming under threat because of Treasury dithering.

Speaking at Lloyd’s annual City dinner, at Merchant Taylors’ Hall, Lord Levene urged the Treasury to sharpen up the UK’s corporate tax regime immediately or risk seeing a flood of companies depart to lower-cost locations such as Bermuda, Dublin and Geneva.

Lord Levene also called on the Chancellor to make specific tax changes for Lloyd’s underwriters and brokers to ensure that the 320-year-old market remains the global centre for insurance and reinsurance business.

He said: “We have discussed this [tax issues for Lloyd’s members] with the Treasury for a very long time. They now tell us that they understand the force of our argument and hope to reach a decision soon.

“I fear though that ‘soon’ is a moveable feast, and we need a favourable decision now. If not, then the supremacy which was so evident in 1952 [when the foundation stone of the previous Lloyd’s building was laid] may slip from our grasp.”

Lord Levene’s comments will have resonated throughout the Lloyd’s market, where virtually tax-free jurisdictions such as Bermuda are often seen as having an unfair advantage against companies domiciled in the UK.

Although only a few Lloyd’s firms have moved offshore in recent years, the trickle now threatens to turn into a flood. Hostility towards government policies has increased recently because of what is seen as the end of the Government’s business-friendly approach. Lloyd’s members including Brit Insurance, Chaucer and Catlin have threatened to move their tax headquarters abroad because they fear their competitiveness is in jeopardy.

Frustrated insurers have criticised the Treasury for its plans to introduce a flat 18 per cent rate of capital gains tax (CGT) and its exploratory proposal to tax foreign profits. Many Lloyd’s companies were also unhappy at the planned £30,000-a-year levy on wealthy “nondom” foreigners.

Lord Levene’s comments carry additional weight because he is a member of the Chancellor’s high-level working group that is consulting on how to ensure that the UK remains competitive.

He said: “It doesn’t need the output of these very distinguished people to restate the obvious. The tax treatment of Lloyd’s in the UK must be amended for us to stay on top.”

The former Lord Mayor of London called on the Treasury earlier this year to delay the introduction of CGT at 18 per cent.

The Treasury has watered down large areas of its tax plans, in particular over the treatment of overseas profits. It has argued that it has simply been trying to prevent tax evasion and said that it will seek a consensus from business before formally introducing changes. However, the suggestion that it might be 2011 before a new regime is finally formalised has prompted some companies to take decisive action.

Last week Henderson Group, the fund manager, Regus, the provider of office space, and Charter, the engineer, all said that they were quitting the UK for more competitive tax zones.

Lord Levene is also chairman of IFSL, the former British Invisibles, which promotes the international activities of UK-based financial institutions.

A market leader . . .

— Lloyd’s is an insurance market of members, rather than an insurance company

— It began in Edward Lloyd’s London coffee house in about 1688

— Lloyd’s conducts business in more than 200 countries

— It covers eight of the top pharmaceutical companies and 52 of the top banks

— Lloyd’s claims that 90 per cent of FTSE 100 companies and 93 per cent of Dow Jones companies have insurance at Lloyd’s

— It made pretax profit of £3.84 billion last year